April 28, 2022

SEC ESG Compliance will be performative. These rules will fail at their primary purpose. They will create material risk. They will create material risk.

SEC ESG Compliance: “Compliance with the U.S. Securities and Exchange Commission’s proposed new rules requiring corporate disclosures of activities and risks associated with climate change will be performative. These rules will fail at their primary purpose: giving investors or stakeholders actionable information. […] Not universally, though, we hope. There are at least a few companies engaged with environmental, social and governance issues that see these rules as an opportunity to distance themselves from even potential allegations of greenwashing.”

April 28, 2022

“The new SEC rules are flawed…nevertheless, they create an opportunity companies should embrace.”

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SEC ESG compliance intent enabled by ESG insurance, which gives shareholders actionable intelligence for investment and voting decisions.

Reputation value is a strategic power companies use to sell more, faster, and at premium prices; and to obtain labor, vendor services, as well as capital on preferred terms.

Steel City Re mitigates the hazards of ESG (reputation) risk that threaten reputation value. We use parametric reputation insurances, ESG insurances, and risk management advisory services to make our clients reputationally resilient.

Risk management, risk financing in insurance captives, and risk transfer through reputation insurances comprise the constituent elements of a comprehensive Steel City Re reputation risk governance and management solution.

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Context and Background

Risk managers are now central to the process for managing risks to reputation and that’s a process marketers and communications professionals need to be a part of. The oversight of reputation risk management is mission-critical.

SEC ESG compliance: Courts have increasingly been ruling that reputation is a mission critical function and oversight of its management is a responsibility of the board of directors. Courts are also ruling that marketing statements companies make – if they related to issues that affect their reputation, like ESG – may be considered material by investors. Litigation along these lines has yielded large settlements or verdicts for plaintiffs.

And now, the SEC has proposed new rules requiring disclosures by public companies related to their ESG activities; those statements could become a communications and reputational minefield.

As a result, reputation risk management is evolving into an intelligence gathering operation spanning the entire enterprise, roping in the enterprise risk manager, compliance counsel, and increasingly, reporting up to the Chief Legal Officer. There is a growing recognition that reputation is not a product merely of marketing and media coverage, but of the degree to which stakeholders’ expectations are aligned with actual performance. The reputation risk management process requires a thorough and ongoing analysis of stakeholder expectations, the risks of disappointment, and a plan for either managing those expectations or assessing and insuring against the cost of failure.    

One Last Question

Are ESG insurance or reputation insurance part of your strategy?